Genius Group (NYSEMKT:GNS) stock is up roughly 40% today following the company’s announcement that its board has approved the spinoff of subsidiary Entrepreneur Resorts. The spinoff will be “subject to shareholder approval and possibly a court order.”
Entrepreneur Resorts trades publicly on the Seychelles MERJ Stock Exchange under the ticker ERL. At the time of the announcement, ERL had a market capitalization of $37 million and Genius owned 97% of outstanding shares. Genius acquired the company in June 2020 through an all-share swap.
The company operates a resort in Bali, “co-working cafes in Bali and Singapore” and a safari in in South Africa. CEO Roger Hamilton added the following in the news release:
“We are fortunate to already have two public listed companies within the group, making a spinoff a viable option. While the MERJ exchange does not have high trading liquidity like the NYSE American, our future plan is to list Entrepreneur Resorts on a larger exchange.”
GNS Stock: Genius Board Approves Entrepreneur Resorts Spinoff
Following shareholder and Singapore legal process approval, all GNS stock shareholders will receive an equal percentage of shares in ERL. The board believes that this transaction will provide synergy to both companies.
Meanwhile, Genius will soon hold its upcoming extra ordinary general meeting on Feb. 16. At the meeting, shareholders will vote on two resolutions.
Resolution No. 1 seeks approval for a 1-for-1o reverse stock split. This would reduce ordinary shares to 3.77 million from 37.75 million. The board has issued several reasons for the reverse split. These include to fix its low share price, reduce vulnerability to “speculative day-trading and short selling” and increase appeal to institutional investors, equity funds and lending institutions.
Resolution No. 2 seeks approval for a share repurchase mandate that will be able to repurchase up to 10% of all ordinary shares outstanding. Genius has noted that it may use “internal resources and/or external borrowings” to finance the repurchases as long as it doesn’t threaten the health of the company. If the resolution is approved, the board will have the power to enact the repurchases until the next annual meeting.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.